11/15/2023
Sometimes, things don't go as planned, and you are forced to make tough decisions. I recently did a private money loan on a project in Montana for the renovation of a duplex. The original loan was for a 6 month term with the option of a 3 month extension. 6 months passed, and they needed more time, then 3 more months passed, and the project still wasn't done. Okay, it's decision time. Option 1: Start the foreclosure process, take possession of the property, finish it, sell it, and probably double my money. Option 2: Extend the loan and keep betting on my client.
My client paid every interest payment on time. I never had to ask where the money was, and they were very good at communicating with me, so I decided to go with option 2. Now time for decision #2, do i charge them more fees to extend the loan again. I decided to let them off and not charge any extra fees. I figured if I hit them with a bunch of extra fees, it would be kinda kicking them when they were down. The delays were caused by things out of their control; material shortages, hvac units arriving damaged, inspection issues, etc.
Long story short, we were recently able to close the project out, I got my money back, and my investors and I made a 15% return.
Yeah, I could have made a much larger return if I went with option #1. However, some times buisness isn't all business, if that makes sense. The relationships we build shape who we are even as a company. Treating people the way you want to be treated can have a much higher return in the long run.
What would you have done if you were in my shoes? Drop your answer in the comments below!
P.S. if you are interested in investing in real estate, is always looking for good partners. Shoot me a DM, and we can set up a time to talk!
